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tv   Trending Business  Bloomberg  June 15, 2016 9:00pm-10:01pm EDT

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♪ rishaad: it is thursday, june 16. this is "trending business". i am rishaad salamat. ♪ rishaad: right, tokyo, shanghai, singapore this hour. ,ow's, japanese bond yields borrowing costs continuing to fall. crowne resorts is on a tear in sydney.
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assets. to protect india relax the rules on aviation letting local affiliates start international flights more quickly. do let us know what you think of our top stories. follow me on twitter at @rishaadtv, and don't forget to hashtag as well, #trendingbusiness. week'selling saying next brexit referendum was one of the reasons why they left rates unchanged. they did not rule out a rate rise next month. .> i can specify a timetable i'm not comfortable to say it is in the next meeting or two, but it could be. it could be. is notot impossible it impossible that by july, for example, we would see data that
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would lead us to believe that we are on a perfectly fine course. rishaad: when janet yellen talks, people listen. markets have been. market participants in particular. david: dovish in a lot of ways. the short version of the reaction we are seeing, equities mixed, rally in the bond market, dollar week, gold on an absolute taylor. absolute tear. i want to talk about the dot -p plot. for those who may not be what may look like a game of backgammon. officials see the fund rate by those times that you see on the x axis.
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those represent the six that see just one rate hike for the rest of the year. the last project in march was one. the slope of the orange line is flatter, the pace of rate hike projected to be more gradual. right, you can get that dot plot. ofyou want to get a sense where the markets are projecting those rates to be, you run the fed funds rate. we just heard from janet yellen and the soundbite that july is live, but the markets don't think so, less than a 6% chance.
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fact, 40% for a rate hike in december. now, we talked about equities here. want to mention is weak dollar, a drop in the dollar index overnight. 94.51, despite money coming back into the u.s. treasury, 10 year yields at 1.56, down one basins s point. can we get gold up? i will get gold up for you. seven days in a row, there we go, a dollar short of $1300. that is the august future, by the way.
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there we go. year, we surpassed this level. that's where we are at the moment. boj, what about other price action ahead of the result of that meeting? becauset is hard to say the central banks make their decisions in a vacuum. can we get the bond yields up in japan? i want to show where we are there. the 10 year was already at a record low right before the market opened, everything basically followed. ,ou're looking at the five-year 10, 20, 30, 40, falling to levels we have never seen in the past.
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that is enough for the bond markets. rollout thosewe prices at the bottom. dollar-yen that will be in focus, the lowest level here. that's going back to 2014. do they act now? there is a a reason they should and a reason they can't. you have the brexit issue. if you look at what some analysts have said, if they act now, they waste their bullets. hard one to call. rishaad: absolutely. we get that decision in the next 2-3 hours or so. what have we got here? there is a lot of pressure to ease, but the question is win, this month or next month?
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27 percent of the respondents to our survey said this month, and 55% said next month. there is good reason to think it could be next month. as you were discussing, this would allow the boj to see what happens with the brexit vote next week and the risk to the stronger yen, and also what inpens in the election japan, the upper house election , and risk not getting involved in that election, and also what happens with the fed, so waiting would allow that and andw it to not the ploy have it wasted, so to speak, if the brexit vote goes that way and there is further strengthening in the yen. 27% of the people we said they could happen today. there is still pressure. you have othero have
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external factors, what is the fed do, and as you mentioned brexit as well. >> that's right. there are a lot of things in play here. ministerese prime delayed the sales tax to 2019 and said there will be fiscal stimulus in the fall. there has been a lot of criticism of the negative rate unveiled in january, so much so that the government is not even mentioning the boj. thee has been criticism and public and among lawmakers about the negative rate policy. rishaad: thank you very much indeed.
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taking a look at that boj decision due out and the next 2-3 hours. with thisound the downturn in macau. yes, a bold plan to spin off crown resorts international in order to boost shareholder returns. it seems investors like it. if we have a look at the move and crown resorts in sydney today, up 15%. it will see crown resorts offload its $2 billion stake in melco crown. it is designed to isolate the business from the wider group. it has very much underperform so far this year. the newly listed entity will have a 20% stake in a japanese restaurant nobu.
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the chairman says investors have under via the australian business as a result of a gambling downturn in macau. shareholders will own equity proportion to their crown stake in the new entity. check noble shares in singapore, currently looking like this, pretty much unchanged. s&p cutting the outlook for the singapore listed commodity trader for the second time in six months. noble now is rated at a be plus with a negative outlook. b+ with a negative outlook. millionannounced a 500 dollar rights issue and a plan does have a business considered be a core asset and announced plans to replace the founder and chairman. it seems that there is poor mad lotte more bad news for -- otte
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it seems that there is more bad news for the lotte group. it was exploring a listing this year that could have raised $500 million. it is the biggest family-run conglomerate, now facing investigations into slush funds and investments. earlier this week, they announced a delay in definitely for a hotel ipo. another setback for the korean conglomerate. rishaad: thank you very much indeed. ahead on powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. -- still ahead on "trending business". >> it is shanghai disney resort. we will be reporting live on the official opening day. rishaad: tom mackenzie later in
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the program. next, janet yellen saying holding down rates is the new normal. we will discuss which factors are here to stay. ♪
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today latest data as of indicates the next report will be on the weak side, so it does not look like inflation is headed upward. i think there is plenty of room for the federal reserve to the patient. >> it is difficult to calibrate what will happen to markets in a brexit outcome. , notts are defensive paying a tremendous amount of yield to take risks at this time, so why do it? on aggressive
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conditions ahead of an event where it's difficult to analyze risk? us tos will not cause change how we position portfolios. the news was in the jobs report today. in the lower inflation expectations in the marketplace. the news was in slower corporate earnings, so there are fundamentals that are causing us to change the way we position our portfolios. rishaad: most investors would associate rate hikes with a great economy. my next guest thinks rate hikes go up because of inflation. he joins us now from singapore. what is the thinking here? >> good morning. is the analogy that the u.s. economy is like a botox field
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on the outside it looks good, but the cracks are showing, therefore we could see more risk aversion. rishaad: we are seeing signs of inflation. that is one of the central colors of fed policy, the containment -- central pillars of fed policy, the containment of prices. the fed would be forced into tightening monetary policy in a weakening economy, and that is the dilemma. that is why i mentioned that the u.s. is increasingly like a botox economy in that everything else is artificially propped up. over time, that would put some pressure on to wages and inflationary expectations in the u.s..
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hand, the bond market to you we are in a low growth environment. political risks in the u.s. and the brexit vote could mean two further complications. global growth is slowing, but you still have some price pressure, so that makes it difficult for the fed. the fed is in a very difficult position. this is why janet yellen has been flip-flopping. what goldcreasingly is showing us as well, the market is worried about the potential for central-bank policy mistakes. rishaad: what happens? you are saying that brexit is important. this vote of discontent, as you put it. that as important will be the stress tests coming up. tell me about that. look, the 23rd of june, the
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theed states is releasing federal reserve stress test, and we could see more stringent measures for the banks. one of the reasons why the financial has disappointed is because things are increasingly again too big to fail, and now the question is how to better regulate banks and make banks interest zero-cost rate environment, actually negative rates in many countries already. potential for dislocation because of further tightening in the sense that if the requirements on banks go up, it would be in direct tightening. i think this is potential he what we could see, something next to brexit on the 23rd of june. if you look at banking shares, bank of america, for instance. , so ically it looks weak
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think the share market is telling us that there is potentially more room for downside ahead of us. you said banks needed to be better regulate it. are they badly regulated at the moment or is there too much regulation there? >> a bit of both. it's a bit like what happened with central-bank policy. at one point, it was necessary to do it, now it has a life on its own. how we started this conversation about the federal reserve, look, the biggest danger is that the fed is becoming like the bank of japan. interest rates at these levels and never normalize rates. this is the problem overall. there is a lot of distortion with banks overregulated and common sense is not necessarily applied anymore and everybody is on autopilot, and that has
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negative consequences for the real economy. rishaad: the banks, are they doing their job properly? you have this mountain of thenation on one hand, them being told they have to land. it difficult to add liquidity to the system and do their job. what needs to be sorted out here? >> the underlying issue is that .here is not a lot of demand the economy is slowing around the world. this is the big question with regards to markets. recent weakness we saw in the u.s. economy, is it a soft moving into ae massive recession coming forward? what mr. disagree with trump says, but to ares i would agree with him. number one, the u.s. tax system needs to be reformed. secondly, the probability of a recession is growing. are notwhy the banks
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lending, because they know fundamentally the economy is weak. with the market narrative, it is changing now. time last year, equities rise because of hopes of further stimulus. now they reach the point where that increasingly becomes counterproductive and were more stimulus could add to market selloffs. this is what gold is telling us. gold at $300 announces showing us that the gold market is telling you there is potentially a lot still ahead of us. rishaad: great talking to you as ever. michael price there. >> the stories making headlines around the world. japan, india, and the u.s. have lunch combined naval exercises. the drill highlights andington's pivot to asia concerns about china's growing influence in the region. india is wary and has strengthened ties with the u.s..
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naval vessel was reported to be in the area monitoring the exercises. of a former son security chief have been jailed for corruption. the sentence was for conducting bribes and conducting illegal operations. -- cameences cami year a year after he was jailed for life in the crackdown on corruption. reports from cairo say search teams have located the main wreckage from the flight that crashed last month. theyviation ministry says have images of debris on the floor. board died when the plane went down. it is still not known what caused the crash, although
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emergency messages mentioned smoke in the cabin. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. right, well, how the bank of japan became one of the world's rigorous landlords helping japanese property trust sore in value. the details are ahead. ♪
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rishaad: the boj record stimulus program may have not done much to spur inflation, but it has helped the property market. ts have soared in value. prices could go even higher from here. it reminds me of the 1980's to some extent. >> you are showing your age there. this is one asset class we will be watching.
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it has been a direct beneficiary of this massive asset purchase program. boj started buying them up in 2010. since then, it has gotten very involved, becoming a figurative landlord, one of the largest owners in japan, $3 billion worth of purchases. up 62%driven premiums for japan. payingans investors are a two thirds premium on top of the value of the real estate properties that are in that trust. comparing it to elsewhere in asia come the closest is australia, 32%. and other big markets like singapore, they are trading below value. close to itstting limits of buying bonds, buying equities.
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by process of elimination, they still have room to expand when it comes to reits. the verdict ofe investors in china and hong kong on the federal reserve. open skies in india. ♪
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♪ rishaad: a look at our top stories come the year near a 20 month high against the dollar. ae federal reserve signals slower approach to rate rises. the yield son japanese government debts lunch -- plunge. gold up for a seventh session. crown resort shares surging 13% on a plan to spin off its international assets.
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the split is designed to isolate crowns austrian interests, which it says are being undervalued. lotte group said to shelve plans for its petrochemicals ipo. it was exploring a listing that could have raised $500 million. shares still down 23% from their highs at the end of march. right, some breaking news out of australia. the jobs data, unemployment figures, notoriously volatile here. let's get over to sydney and paul allen. the headline number unchanged as expected at 5.7%, so no massive surprise like we often get with the austrian unemployment figures, but once
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again, if we move deeper into the numbers, they are not as impressive as they seem. change of 17,009 hundred, much better than expected, 15,000 had been forecast, but all of those gains come from part-time jobs, no full-time jobs gained in the month of may according to this data, and the participation rate has fallen, 64.8%, weaker than expected and weaker than the read we had in april. if you read look at the dollar of movingit is sort sideways, no huge change there, but there are political implications for this number as well. datais the last piece of we were expecting ahead of the july 2 election here. now,ood employment reads strong gdp read is well, so it's likely that malcolm turnbull's government will look to make hay
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out of these numbers, even though that 5.7% figure may hide a slightly larger problem. rishaad: thanks for that. your reaction to that number and looking at the hong kong and shanghai open. what is the aussie dollar doing? 74.21, but we have to put this into context. we are looking at a weak dollar. that is the short of it. we will talk about mixed equity markets in a few moments. emanating from the fed was really about lower rates for longer. that is the simplest way to put it. a strongooking at dollar on the back of a weaker u.s. dollar. quite come back to the session highs we saw midweek.
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have a look at the renminbi. the fixing is a little bit stronger because of the weaker dollar. very interesting, very compelling note here from commerzbank. because of developments from the givesore dovish, this now a lot of central banks in asia, taiwan,donesia, india, basically a window within which to introduce more policy easing, if needed. we are now basically looking at a lesser risk that capital outflows might put further pressure on the currencies. saying is that we could see the pboc cut rates 25 basis points. , three minutes in , hang sengese open
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down 1%, shanghai lower. since i was last year, we have seen momentum pick up to the downside here. volumes are light ahead of the boj as expected. some of these markets are in a holding pattern. rangee seen tight trading is even though we are pushing towards those session lows. where does this end? out ofrth day in a row four that we are seeing all-time lows in the bond market. bond, -20.ear aussie bond yields, 202. -- 2.02. a lot of things we are watching. the picture could be different in two hours depending on what the boj does. 10 years of
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deliberation and a debate coming to an end and india as it relaxes aviation regulations. to be a majored boost for the world's fastest-growing aviation market. it's great news for some carriers. news, but not quite open skies. here's the deal. local carriers can now fly overseas provided they deployed 20 planes or 20% of capacity a local routes. before that, they needed a minimum of 20 aircraft in their fleet and were required to have five years of serving domestic routes. local ventures dan to gain the most. it won't be surprising if they start in testing -- investing in india as well.
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this new policy has been in the making for at least 13 years, considered by successive governments. per prime minister modi finally bit the bullet, meaning greater competition. changing times. are the overseas carrier saying here? ore we heard from airasia singapore airlines? response, if you ask me. singapore airlines and the like say they will study the policy before they say anything. emirates says it aims to address some of the challenges. moveia ceo welcomes the that is a tad critical. he said the minimum fleet requirement of 20 is too many, but he did thank prime minister
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modi for the changes. we are told that airasia plans to build its fleet to 20 from the current six and plans to invest in asia. the sense is that india should embrace open skies and remove all the restrictions. it takes 36 months to get an airline started, 3-4 years to build a fleet of 20 planes, so it will take some time. rishaad: thank you a lot for that in singapore. rally in itsn a bond markets, but investors are catching their breath from the rise. how much debt to these chinese companies really have? >> nonfinancial firms have to repay 2.2 trillion yuan in the second half, a record amount. a lot of this is poorly rated debt. so there are some credit risks
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despite the recent bond rally. rishaad: that is a damocles sword actually, but never mind. are these companies able to refinance? that will be key. >> exactly. with the chinese economy approving, -- improving, a lot are expecting an expanded stimulus. we have seen a crackdown on's shadow banking, which we know a lot of these companies rely on for financing. if you look at the pboc credit data they came out yesterday and that financing of corporate bonds was a record low last month and so it does seem like a lot of these distressed borrowers will have a harder time rolling over their debt. rishaad: what does this mean actually for yields in the bond space? some analysts are saying that credit spreads have narrowed recently, but they are set to widen again.
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china only had its first few defaults in recent years, which means the risk premiums have been suppressed for a long time, so it would take a long time for that to normalize. rishaad: thank you for that on this bond issue in china. let's have a look at some other stories we are following. car owners and the u.s. government have been given more time to file settlements in the volkswagen emissions scandal. a federal judge pointed to the highly technical nature of the discussion. they have until noon new york time on june 28 a file that draft agreement. volkswagen admitted that it fixed emissions tests on 11 million cars worldwide. main rival vita $28 billion. didi raised $4.5 billion in a round of funding backed by apple and the mystic investors.
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make -- it would the third biggest privately backed company. products that can fit in envelopes come into effect next month as amazon cuts fees on small items. to new rate will apply merchants using the amazon fulfillment program. up next, walt disney versus wang. ask if the u.s. giant can hold off one does ambition. -- wanda's ambition. ♪
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>> it is 940 2 a.m. in hong kong, the stories making headlines around the world. -- because ofd security concerns after someone entered the airport's restricted area and stowed away on a flight to dubai. it will impose an unspecified punishment on the airport operator. a cyber security firm has uncovered an online marketplace for hackers. accessy the market sold to hack corporate and government services for as little as six dollars. it declined to give the names of companies, but said several banks and firms from china and the uae were among them.
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spacex has launched more satellites into orbit. rocket blasted off, caring two communications satellites. the attempt to land failed. a rapidter had unscheduled disassembly, or it broke up and planing rush. .trending business" powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. it has taken 17 years and cost 5.5 billion dollars, disney unlocking its gates to the shanghai version of the magic kingdom. its theme park open today and tom mackenzie is there. to say it is a surefire hit, but it is pulling it in. sure fire hit yet, but
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600,000 visitors already in the test run phase over six weeks. toy're hoping for 10 million 12 million visitors a year. i am the pirates of the caribbean section of the park. ship behind me, noise effects, cannons, the kids love that one. just behind me is the disney castle, the biggest castle they've ever built, the most interactive castle, and my producer tells me it is where all the princesses are. there are themed areas of the park and the fastest roller coaster that disney has built, which is called tron. wonderland alice in part of the park as well.
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it is currently worth 600 billion u.s. dollars, and he expects to double that by 2020. there will be challenges, wanda .ompetition from there's expected to be 60 resorts and parks built in china by 2020. walt disney has not always exceeded, hong kong lost money and paris had to be restructured. rishaad: there's a bit of a tourism peak there. disney some say the timing could not be better. that's right. the chinese consumer is still bullish. they still expect their wages to increase and are shifting their spending on experiences like this. ourselves.n that
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it is happening all over the country. willing tosumers are spend more money on these kinds of experiences. cheaperts to bring experiences and cheaper food. disney wants to focus on quality. disney thinks they have the right mix here. within aon people three hour journey within the park. saysad: the boss at wanda disney is no competition. a survey by branding consultancy
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's of the frenzy of mickey mouse and donald duck and the era of blindly following them have passed. >> i would say that is wishful thinking on his part. disney has created an iconic global brand, and while that brand may not have 100 years of history in china, it is built on a fundamental emotional connection with consumers based on experiences. i think that will translate in china as well. rishaad: it has not been part of china psyche or the zeitgeist with people growing up, but i guess you have to start somewhere. >> if you think back to the movies, the characters, they have been in china for a long time, officially licensed or not , and there is a big aspiration a look outward in china by set of consumers so they will have had exposure to the wide variety of what disney has
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done. acquisitionsde that keeps their content fresh. foraad: it is also a battle wanda isceived, presenting himself as the local player against this foreign horde. i don't think that sense of national pride translates to how you choose a theme park. driveey themes that attendance our excitement, fun, great rides, and number three was brand, so those are things that wanda will have to develop to compete head-to-head with disney. rishaad: that's just it. brand was the third most important element. >> if you look at number one, excitement and fun, a lot of that is the emotional connection with the brand and the attractions.
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a lot of that comes from the the intellectual property that lies beneath disney. rishaad: that's one of the thing , you have to keep on being relevant, and that's how with all these other things you mentioned, film deals, etc., it keeps them relevant. does wandaoes -- how build its brand. to decide where they want to fit in the marketplace. he wants to have more locations, but that does not necessarily hold true. the least important thing is location to driving theme parks. they have to find what is that emotional connections they want to make with their consumers and position themselves. i think what we have seen is that demand is pretty in- elastic.
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they are not really thinking that getting that experience is something they will pinch pennies on. why is the cost so low in your profit survey? >> there are theme parks around the world and in china where it is more of an emotional purchase than a rational purchase. an emotional purchases lest important. they have to take this theme park, and i'm sure it won't be the only theme park in china. >> there are other developments happening. shanghai dream center, dreamworks and other partners opening in shanghai, so there are more theme parks coming into china. the second thing you have to think about is that with the travel, there are more interesting theme parks popping up her round asia that will capture that outbound
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,ravel, 20 century fox world universal studios, lots of companies are building theme parks all around asia. rishaad: great talking to you. change, ahe winds of turbine maker has 1% of the chinese market. we will be hearing from the chief executive next. ♪
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world's leading maker of wind turbines announcing plans to sell its biggest project in china, the latest plan to grow it share. china offers enormous opportunity. our latest and most modern and most efficient turbine.
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we have seen great success on that platform in europe and the u.s. expect the same development in china. the manufacturing capability we have in china is very advanced. so it is possible possible to have a global supply chain here. >> you have less than 1% market are the china, what strategies to expand that? >> we saw a good growth last year. china was the third largest , so weon a global scale will see an increase in market share on delivery this year. talk about time, we
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how we will bring the latest to china. it is an important part of those steps to improve our position. we also count on that the market is changing. megawattgh focus on capital expenditures to more produced, andatts that's the kind of market that ands at megawatts produced not megawatts in store. executivehe chief there talking to tom mackenzie. hong kong, shanghai like this. makehai did manage to again in the session yesterday of 1.3%. hang seng in hong kong currently moving to the downside, 1.5%.
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the federal reserve deciding not to do anything this month, and july oaks like it will be a month where they stay pat. relaxing the rules, we find out which airlines will benefit from india's push to ease aviation laws. ♪
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>> from our studios in new york city this is charlie rose. charlie rose: we begin with our continuing coverage of the orlando attack. 49 people were shot dead. omar mateen opened fire in orlando. continues toon unfold. it has been reported that omar mateen frequented the pulse club in years past. there is also suspicion that his second wife was aware of his plan. president obama spoke earlier today at the u.s. treasury. he called for better gun control. president obama: iraqi forces


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